Sec. 2. Findings

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Congress finds that— the contractual doctrine of valid when made which, as applied to lending agreements, provides that a loan that is valid at inception cannot become usurious upon subsequent sale or transfer to another person; this important and longstanding principle derives from the common law and its application has been a cornerstone of United States banking law for nearly 200 years, as provided in the case Nichols v. Fearson, 32 U.S. (7 Pet.) 103, 106 (1833), where the Supreme Court famously declared:

Yet the rule of law is everywhere acknowledged, that a contract free from usury in its inception, shall not be invalidated by any subsequent usurious transactions upon it. ; in 2016, the Solicitor General, in consultation with all Federal banking regulators, filed an amicus brief in the case of Midland Funding, LLC v. Madden, 136 S. Ct. 2505

(2016)(mem.), denying cert. to 786 F.3d 246 (2d Cir. 2015), that described the United States Court of Appeals for the Second Circuit in that case incorrect with an analysis reflect[ing] a misunderstanding of section 85 of the National Bank Act and Supreme Court precedent, because it contradicted the contractual doctrine of valid when made; the valid-when-made doctrine, by bringing certainty to the legal treatment of all valid loans that are transferred, greatly enhances liquidity in the credit markets by widening the potential pool of loan buyers and reducing the cost of credit to borrowers at the time of origination; a joint academic study from professors at Stanford, Fordham, and Columbia universities concluded that the Madden v. Midland decision has already disproportionately affected low- and moderate-income individuals in the United States with lower FICO scores; and if the valid-when-made doctrine is not reaffirmed soon by Congress, the lack of access to safe and affordable financial services will force households in the United States with the fewest resources to seek financial products that are nontransparent, fail to inform consumers about the terms of credit available, and do not comply with State and Federal laws (including regulations).

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786 F.3d 246

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Sec. 2

Findings

F. App'x786 F.3d 246

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